updated 2/9/2011 3:17:18 PM ET 2011-02-09T20:17:18

PORTLAND, Ore., Feb. 9, 2011 (GLOBE NEWSWIRE) -- Albina Community Bancorp (OTCBB:ACBC), the holding company of Portland's only certified community development bank today reported significantly improved asset quality, recoveries from prior loan write-downs and improving net interest margin which contributed to a profitable fourth quarter in 2010. Net income was $69,000, or $0.05 per common share, for the fourth quarter ended December 31, 2010, compared to a net loss of $1.7 million, or $1.53 per common share in the preceding quarter, and a net loss of $3.9 million, or $1.33 per share, in the fourth quarter a year ago. For the full year, Albina lost $3.5 million, or $2.66 per common share, compared to a loss of $9.5 million, or $5.56 per common share, a year ago.

"We believe our fourth quarter results mark a turning point in terms of credit quality and operating performance," said Robert McKean, President and Chief Executive Officer. "With recoveries of previously charged off loans totaling $1.3 million, we were able to book a reverse provision for loan loss expense of $900,000 in the quarter. We are making good progress on returning our company to a healthy financial condition and, quite frankly, we are in a much better position than we were a year ago. We have made excellent progress shrinking our balance sheet, and we are seeing strong interest from investors in our efforts to raise new capital."

"We have a diverse mix of loans and a deposit base that reflects our solid local customer base," said Cheryl Cebula, President and Chief Operating Officer of Albina Community Bank. "We continue to reach out to the greater Portland neighborhoods and are fulfilling our mission to serve the needs of a broad range of customers, especially low-to-moderate income individuals and small business owners and to those that care most about our community."

Fourth Quarter 2010 Financial Highlights: (for the period ended December 31, 2010)

  • Net income of $69,000, or $0.05 per share for the quarter ended December 31, 2010.
  • Net interest margin improved to 4.41% in the fourth quarter, compared to 3.85% in the preceding quarter, and 3.26% in the fourth quarter ended December 31, 2009.
  • Asset quality improved substantially with nonperforming assets decreasing 49% to $6.8 million from $14.0 million in the preceding quarter and down 50% from $13.7 million a year ago. 
  • Allowance for loan losses stands at $2.9 million, or 2.49% of total loans.
  • Deposits totaled $129.2 million, compared to $164.9 million a year ago, as the level of wholesale funding was reduced substantially.
  • Total assets declined 26% to $147.8 million from $200.0 million a year ago.
  • Gross loans were $116.7 million, down 17% from $141.2 million a year ago.

Credit Quality

Nonperforming assets (NPAs), consisting of nonperforming loans, other real estate owned (OREO), and loans delinquent 90 days or more, declined significantly during the quarter to $6.8 million, or 4.60% of total assets, at December 31, 2010, from $14.0 million, or 8.54% of total assets in the preceding quarter, and down from $13.7 million, or 6.83% of assets a year ago. "In addition to the significant improvement in our credit quality, we are also seeing a considerable slowdown in new problematic loans," said Jim Schlotfeldt, Chief Financial Officer. "Real estate construction loans also continue to decline substantially and now account for less than 3% of the loan portfolio."

Nonperforming loans (NPLs) decreased 48.0% during the quarter to $5.3 million, compared to $11.0 million in the preceding quarter, and declined 48.3% from $10.9 million in the fourth quarter a year ago. NPLs represented 4.50% of total loans at December 31, 2010, compared to 8.93% of total loans three months earlier and 7.70% a year ago.  "The decline in NPLs during the quarter was attributed to our diligent efforts in writing down our properties to current market value and quickly converting the nonperforming loans to other real estate owned (OREO)," said Schlotfeldt. "We recovered $700,000 on a condominium project and another $271,000 on a residential retirement facility that had previously been charged off. Both these developments reflect the continuing improvement in asset quality at year end."  

Net charge-offs for the year totaled $3.0 million, or 2.31% of average loans, significantly down from $9.9 million, or 6.38% of average loans a year ago. Recoveries of previously charged off loans totaled $1.3 million during the quarter. Other real estate owned (OREO) declined to $1.5 million from $3.0 million in the preceding quarter and $2.8 million a year ago. 

The allowance for loan and lease losses (ALLL) totaled $2.9 million, or 2.49% of total loans at December 31, 2010, compared to $3.0 million or 2.45% of total loans at September 30, 2010, and $3.9 million, or 2.78% of total loans a year ago.

Balance Sheet Results

Total assets were $147.8 million at December 31, 2010, compared with $200.0 million at December 31, 2009. Loans, net of reserves, declined during the quarter to $113.8 million at year-end compared to $119.6 million at September 30, 2010, and $137.2 million a year ago.  The decline in loans during the quarter reflects Albina's planned reduction in its real estate construction portfolio and other loan concentrations that presented risk.

The following table shows the changes in the loan portfolio in each category (12/31/2010 compared to 9/30/2010 and 12/31/2009)

             
(Dollars in thousands) As of the Date Ended
  December 31,   September 30,   December 31,  
  2010   2010   2009  
  (unaudited)   (unaudited)   (unaudited)  
Loans            
             
Commercial business  $ 25,653 22.0%  $ 25,816 21.1%  $ 24,084 17.1%
R/E construction  3,246 2.8%  4,258 3.5%  12,592 8.9%
Commercial R/E  56,529 48.4%  61,042 49.8%  69,062 48.9%
Multifamily residential  4,625 4.0%  4,457 3.6%  4,403 3.1%
One to four family residential  17,680 15.1%  17,596 14.3%  19,023 13.5%
Consumer  9,183 7.9%  9,704 7.9%  12,275 8.7%
Unearned Loan Fees  (199) -0.2%  (243) -0.2%  (286) -0.2%
Total Loans  116,716 100.0%  122,631 100.0%  141,153 100.0%
             

The loan portfolio is well-diversified with a wide variety of borrowers and collateral. Over 70% of the portfolio is secured by real estate, both residential and commercial. Consumer loan participations declined 17% year-over-year standing at $7.9 million. Commercial loan participations dropped 36% year-over-year to $11.7 million. Consumer and commercial loan participations provide additional earnings and diversification for the portfolio and account for approximately 17% of the total loan portfolio. More than 46% of Albina's commercial real estate loans are owner-occupied and another 18% are partially occupied by owners with the remainder of the building leased to other businesses.

At December 31, 2010, total deposits were $129.2 million compared to $164.9 million a year ago. Noninterest bearing deposits accounted for 23% of total deposits, interest bearing and savings accounts accounted for 35% of deposits and time certificates were 43% of total deposits at year end.  "We continue to see the support of our community with the increase in our home-grown deposits allowing us to be less reliant on brokered CDs," said McKean. "Albina is well-known in our community, and customers are looking to develop and build solid relationships with us. With the support of the members of our community, we are making a positive impact in our neighborhoods."   The ratio of loans to deposits was 88.05% at December 31, 2010, compared with 83.21% a year earlier.   

The investment securities portfolio totaled $15.8 million at December 31, 2010. "Our investment portfolio consists entirely of investment grade agency securities that have an average life span of less than 1.4 years; excess liquidity is invested in securities until the underlying time deposits mature or loan originations increase," said Schlotfeldt. "We maintain strong liquidity by holding liquid securities and through our available lines of credit at the Federal Home Loan Bank and the Federal Reserve Bank."

Operating Results

The reversal of $900,000 in the provision for loan losses during the fourth quarter 2010 resulted in net interest income of $2.4 million. After the $1.1 million provision for loan losses, third quarter net interest income was $324,0000, compared to a net interest loss of $2.5 million in the fourth quarter a year ago, which included a provision of $4.0 million.

Non-interest income was $62,000 for the fourth quarter of 2010, compared to $294,000 for the fourth quarter of 2009. The decrease in the fourth quarter was due to a $309,000 loss on sale of OREO.   For the year, non-interest income was $1.2 million, down 69% from $3.8 million in 2009. The loss on sale of OREO in the full year of 2010 totaled $532,000.    

Albina's net interest margin was 4.41% for the fourth quarter, an improvement of 56 basis points compared to the preceding quarter and up 115 basis points from the fourth quarter a year ago. For the full year of 2010, the net interest margin was 3.98%, up 94 basis points from 2009.  "The recoveries of previously charged off interest offset nonacrrual reversals generating a small benefit in the quarter and were basically a wash in the full year NIM calculation," said Schlotfeldt. "In addition, maturing certificates of deposits and the run-off of high cost certificates of deposits reduced funding costs substantially in the fourth quarter and are expected to benefit first quarter 2011 results as well."

Non-interest expense increased 33% to $2.4 million for the fourth quarter 2010 compared to $1.8 million for the fourth quarter a year ago. "The increase in total non-interest expense for the fourth quarter reflects a one-time impairment charge of other long lived assets, higher ongoing FDIC insurance premiums, OREO valuation and maintenance expenses, and additional legal and professional expenses associated with managing the loan portfolio," added Schlotfeldt. "Salaries and employee benefits remained flat." 

Due to the capital structure of the company, preferred shareholders participated in the per share loss during the quarter and year-to-date periods. "Our original shareholders, owners of the Preferred A and B series, had reached their maximum participation in our earnings stream in prior years," said Schlotfeldt. "With the recent losses, however, our retained earnings have fallen below their earnings participation threshold. Consequently, the earnings per share allocated to common shareholders was lower by $.01 in the fourth quarter and loss per share allocated to common shareholders was lower by $.61 for the year ended December 31, 2010. On a pro rata basis, future losses will continue to be allocated between preferred and common shareholders and future earnings will be reduced until preferred shareholders reach the $100 per preferred share liquidation preference." 

About Albina Community Bancorp

Albina Community Bank is a locally owned, full-service, independent commercial bank committed to investing in individuals, families, businesses and local neighborhoods. The Bank promotes community development by providing products and services and banking solutions that are directed towards improving the social or economic conditions of underserved peoples or residents of distressed communities. Albina offers a wide range of competitive banking solutions, while also maintaining its mission to promote jobs, growth of small businesses, and wealth in our local Portland neighborhoods.

Albina Community Bank opened in December 1995 as the sole subsidiary of Albina Community Bancorp. Albina is one of approximately 60 commercial banks across the United States certified by the U.S. Treasury Department's Community Development Financial Institutions Fund as a community development financial institution. Albina is the only CDFI-certified commercial bank headquartered in Oregon. Albina operates from five local Portland locations including offices at: 2002 Northeast Martin Luther King Jr. Boulevard; 8040 North Lombard in the St. Johns neighborhood of North Portland; 4020 Northeast Fremont Street in the Beaumont neighborhood; 5636 Northeast Sandy Boulevard in the Rose City Park neighborhood of the International District; and 430 Northwest 10th Avenue in Portland's Pearl District; and a remote ATM at New Columbia in North Portland.  For more information about Albina Community Bank, please call 503-287-7537 or visit www.albinabank.com .

This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995, including statements concerning the continued financial performance of the company and its plans and opportunities for future growth. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially than those expected. Specific risks include, but are not limited to, general business and economic conditions, competitive factors, pricing pressures, further interest rate changes, and other factors listed from time to time in Albina Community Bancorp's regulatory reports. 

       
Albina Community Bancorp      
Balance Sheet      
(Dollars in thousands) As of the Date Ended
  December 31, September 30, December 31,
  2010 2010 2009
  (unaudited) (unaudited) (unaudited)
ASSETS      
       
Cash and due from banks  $ 464  $ 411  $ 436
Interest-bearing deposits  4,902  9,789  7,369
Federal funds sold  26  42  71
Total cash and cash equivalents  5,391  10,242  7,876
       
Time deposits with other banks  398  2,336  2,836
Investment securities   15,820  17,244  37,612
Federal Home Loan Bank Stock  1,325  1,325  1,325
       
Loans      
Albina originated loans  97,071  99,365  112,037
Commercial participations purchased  11,710  14,836  18,408
Consumer participations purchased  7,883  8,430  10,708
Total loans  116,664  122,631  141,153
       
Allowance for loan and lease losses  (2,901)  (3,005)  (3,921)
Net loans  113,764  119,625  137,232
       
Property and equipment, net  5,016  5,094  5,337
Other real estate owned  1,547  5,418  2,794
Other assets  4,549  4,678  4,958
       
Total assets  $ 147,810  $ 163,561  $ 199,969
       
LIABILITIES AND EQUITY      
       
Deposits      
Non-interest bearing deposits  $ 29,094  $ 30,167  $ 27,667
Interest-bearing accounts  40,227  41,786  47,732
Savings accounts  4,880  5,369  4,650
Time certificates  55,006  67,548  84,878
Total deposits  129,207  144,871  164,927
       
Liabilities      
Other borrowings  10,434  10,726  23,305
Subordinated debentures  6,186  6,186  6,186
Other liabilities  2,000  1,995  1,912
Total liabilities  147,828  163,778  196,330
       
Shareholders' equity:      
Preferred stock  2,482  2,432  2,482
Common stock  8,611  8,660  8,610
Retained earnings  (11,480)  (11,549)  (7,966)
Accum. other comp. income  370  241  513
Total shareholders' equity  (18)  (216)  3,639
       
Total liabilities and equity  $ 147,810  $ 163,561  $ 199,969
       
FINANCIAL RATIOS      
Loans / deposits 88.05% 82.57% 83.21%
Non-performing loans / total loans 4.50% 8.94% 7.70%
Reserve / loans 2.49% 2.45% 2.78%
       
Albina Community Bancorp          
Income Statement          
(Dollars in thousands, except per-share data)  Three Months Ended   Twelve Months Ended 
   December 31,   September 30,   December 31,   December 31, 
  2010 2010 2009 2010 2009
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
INTEREST INCOME          
Interest and fees on loans  $ 1,971  $ 1,968  $ 2,212  $ 8,212  $ 9,354
Interest on investment securities  125  96  276  625  1,097
Other interest income  20  26  38  89  163
Total interest income  2,116  2,089  2,525  8,926  10,614
           
INTEREST EXPENSE          
Interest on deposits  427  531  760  2,178  3,600
Interest on borrowings  145  184  282  817  1,324
Total interest expense  572  714  1,041  2,995  4,925
           
NET INTEREST INCOME  1,544  1,374  1,484  5,932  5,689
Loan loss provision  (900)  1,050  4,000  1,950  11,055
Net interest income after provision  2,444  324  (2,516)  3,982  (5,366)
           
NON-INTEREST INCOME          
Service charges and fees  169  187  204  749  777
Government payments and contracts  --   --   --   --   2,211
Loan fees on brokered loans  --   48  --   48  4
Merchant & card interchange income  97  97  71  371  256
Realized gain/(loss) on sale of investment securities  --   --   63  130  242
Realized gain/(loss) on sale of Loans & OREO  (309)  (198)  50  (532)  50
Realized (loss) on termination of interest rate Swap  --   --   (193)  --   (193)
Other income  105  106  99  410  419
Total non-interest income  62  239  294  1,175  3,761
           
NON-INTEREST EXPENSE          
Salaries and employee benefits  706  702  709  2,908  2,964
Occupancy and equipment  197  181  190  748  753
Legal and professional  397  239  163  1,228  848
Marketing  44  43  38  184  178
Data processing  183  194  204  794  751
Loan and OREO  369  551  126  1,239  949
FDIC assessment  142  181  140  737  639
Impairment of long lived assets  270  --   --   270  -- 
Other   129  132  257  549  749
Total non-interest expense  2,437  2,224  1,827  8,656  7,831
           
PRETAX INCOME (LOSS)  69  (1,661)  (4,049)  (3,500)  (9,435)
Provision for income taxes  --   --   (150)  15  43
           
NET INCOME (LOSS)  $ 69  $ (1,661)  $ (3,899)  $ (3,515)  $ (9,478)
           
Earnings (loss) per share:          
Basic  $ 0.05  $ (1.53)  $ (1.33)  $ (2.66)  $ (5.56)
Diluted  $ 0.05  $ (1.53)  $ (1.33)  $ (2.66)  $ (5.56)
           
Weighted average shares outstanding:          
Basic  1,073,310  1,073,310  1,071,559  1,073,222  1,070,534
Diluted  1,073,310  1,073,310  1,071,559  1,073,222  1,070,534
           
FINANCIAL RATIOS          
Return on average assets 0.04% -0.92% -1.76% -2.01% -4.28%
Return on average equity 4.57% -79.99% -39.52% -232.60% -96.08%
Net interest margin 4.41% 3.85% 3.26% 3.98% 3.04%
           
             
Albina Community Bancorp            
Selected Highlights            
(Dollars in thousands) As of the Date Ended
  December 31,   September 30,   December 31,  
  2010   2010   2009  
  (unaudited)   (unaudited)   (unaudited)  
Loans            
             
Commercial business  $ 25,653 22.0%  $ 25,816 21.1%  $ 24,084 17.1%
R/E construction  3,246 2.8%  4,258 3.5%  12,592 8.9%
Commercial R/E  56,529 48.4%  61,042 49.8%  69,062 48.9%
Multifamily residential  4,625 4.0%  4,457 3.6%  4,403 3.1%
One to four family residential  17,680 15.1%  17,596 14.3%  19,023 13.5%
Consumer  9,183 7.9%  9,704 7.9%  12,275 8.7%
Unearned Loan Fees  (199) -0.2%  (243) -0.2%  (286) -0.2%
Total Loans  116,716 100.0%  122,631 100.0%  141,153 100.0%
             
             
ASSET QUALITY            
Non-Performing loans:            
Loans past due 90 days or more  207    1,809    116  
Non-accrual loans  5,040    9,148    10,753  
Total non-performing loans  5,248    10,957    10,869  
OREO  1,547    3,017    2,794  
Total non performing assets  6,795    13,974    13,663  
             
Non performing assets / total assets 4.60%   8.54%   6.83%  
             
             
Beginning ALLL - from previous FYE  3,921    3,921    2,736  
Provision for loan loss expense  1,950    2,850    11,055  
Loan charge offs  (4,669)    (4,152)    (10,199)  
Loan recoveries  1,698    386    330  
(Charge offs), net of recoveries  (2,971)    (3,766)    (9,870)  
Ending ALLL - YTD  $ 2,901    $ 3,005    $ 3,921  
             
             
Average Loans            
Quarter  $ 118,892    $ 125,225    $ 145,315  
YTD  129,719    133,367    154,766  
Net charge-off            
Quarter  (795)    1,148    3,782  
YTD  2,971    3,766    9,870  
Net charge-offs as % of Average loans            
Quarter -0.67%   0.92%   2.60%  
YTD 2.29%   2.82%   6.38%  
             
             
Non-accrual loans            
Residential Development  $ 1,540    $ 3,705    $ 7,190  
Commercial Real Estate  3,388    5,398    3,316  
Commercial/ Industrial  113    45    247  
Total Non-accrual loans  5,040    9,148    10,753  
             
CONTACT: Robert L. McKean, President & CEO
         (503) 288-7280
         Jim Schlotfeldt, Chief Financial Officer
         (503) 288-8495

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